"Pay To Play" Probe Hits New Mexico

Washington Post: Gov. Bill Richardson's Office Investigated Over Political Contributor's $1.4M State Contracts

(Washingtonpost.com)  This story was written by Carol D. Leonnig.

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A federal grand jury is investigating whether a financial firm improperly won more than $1.4 million in work for the state of New Mexico shortly after making contributions to political action committees of Gov. Bill Richardson (D).

The probe focuses on whether the governor's office urged a state agency to hire CDR Financial Products. The probe is in a highly active stage at a time when President-elect Barack Obama has chosen Richardson as his nominee for secretary of commerce, according to two sources familiar with the investigation.

The grand jury in Albuquerque is expected to hear testimony today from several key witnesses, including officials at Richard's political action committees and bankers at J.P. Morgan who worked with CDR on the state's investments.

The inquiry is part of a long-running nationwide investigation into "pay-to-play" practices in local government bond markets. In other cities, federal investigators are questioning whether financial firms have lavished politicians with money and gifts in exchange for fee-paying work advising municipal and local governments on investments. Authorities indicted the mayor of Birmingham, Ala., this month on charges of taking hundreds of thousands of dollars in gifts and loans from a firm that led the city into toxic investments and massive bankruptcy.

In the New Mexico case, the FBI and federal prosecutors are investigating how CDR, based in Beverly Hills, Calif., won lucrative fees from the New Mexico Finance Authority in 2004 soon after donating $100,000 to two Richardson organizations.

From 2003 to 2004, CDR Financial gave $75,000 to Sí Se Puede, which paid for expenses at the Democratic National Convention in 2004. CDR's president and founder, David Rubin, also gave $25,000 to Moving America Forward, which funded Richardson's efforts to register Hispanic and American Indian voters.

Rubin was generous to Obama's campaign as well, giving $29,000 to help elect the senator to the White House. Yesterday, the Obama transition office declined to comment on the development.

Gilbert Gallegos, a spokesman for Richardson, said the governor was "aware of questions surrounding some financial transactions at the New Mexico Finance Authority" and expected state officials to cooperate fully. Gallegos declined further comment.

The U.S. attorney's office in New Mexico also declined to comment on the investigation, which began in the summer. Several Finance Authority board members have publicly confirmed being interviewed by the FBI. Paul Kennedy, an attorney for Richardson's former chief of staff, David Harris, confirmed that his client had been interviewed by the FBI in the summer but declined to comment further.

CDR's attorney, Richard Beckler, declined to answer questions about the probe's focus.

"CDR has always tried to abide by these byzantine campaign finance regulations and is cooperating fully with this investigation," Beckler said in a telephone interview yesterday.

CDR made $1.48 million advising the authority on interest-rate swaps and refinancing of funds related to $1.6 billion in transportation bonds issued by the agency, state officials confirmed. Interest-rate swaps are financial contracts based on the value of commodities, loans or other assets, and debtors sometimes use them to lower borrowing costs. But many swaps have recently proven unwise as the assets upon which they were based plummeted in value.

The state hired CDR after requesting proposals for a bond adviser on Dec. 30, 2003. Sources familiar with the investigation said CDR initially did not make the list of the top three bidders. But the authority committee considering the bids redid the selection process and split some work, eventually hiring CDR for a part.

Committee Chairman Rick Homans was Richardson's economic development secretary at the time. He is now Richardson's taxation and revenue secretary and has declined to comment.

Staff researcher Julie Tate contributed to this report.

[likenoone-2009]

The obama show will be a great comedy

[whosaid1]

likenoone: my attempt at humor...

[kansas1946]

Uh oh. If it looks like Richardson was involved in ANYTHING, Obama will drop him like a hot potato, as he should. I am really getting a belly full of these politicians. Of course, part of the problem is the amount of money it takes to even run for office.

[likenoone-2009]

most ethical hahahahahahahahahahha

[whosaid1]

There ya''ll go again....picking on democrats. They are democrats and because they are democrats,.... they could not possibly have done anything illegal or unethical! The people of the United States have just elected what will be the most "ethical" president in our history....he was elected to state office and national office by the electorate in Chicago without the assistance of the %u201Cnotorious%u201D political machine!!! He and his transition team know nothing about Blagojevich%u2026illegal Chicago politics or Richardson%u2019s issues for that matter. WOW!!!.....

[vincan-2009]

Bush has been the most corrupt president in my life time. It is very obvious that President Elect Obama is doing everything he can to improve the country with his wise appointments. Obama is working to save America from the depths of despair that Bush, Cheney and republicans have brought the country to. It is unbelieveable, considering Bush''s policies of incompetent appointments, incompetent conduct of the war, complete financial irresponsibility, and corrupt policies in every department of our government, that anyone would dare criticize Obama''s hard work. Nothing that Bush and Cheney have done has been done for the average American. They rewarded their oil buddies, their big corporate donors, and are now leaving the government busily making rules and regulations that are detrimental to all living things - air, water, land. That is how much Bush and Cheney have changed - not at all.

[vincan-2009]

Sounds like the republicans are up to their corrupt tricks of making false accusations about their political opponents. If this is not politically motivated I will be amazed.

[agidoi]

and putting them in office

[agidoi]

sounds to me obama is backed by a bunch of crooks. taking our money and running

[ofbyfor3]

They continued to do this all the way to the 10th Grade, and he continued to fall farther behind the other kids in his class. He naturally quit school because it was nothing but torture.

Posted by endurorob at 01:21 PM : Dec 16, 2008

I know what you mean. Sorry to hear that about your son. How they expect kids that have fallen behind in one grade to keep up in the next is beyond logic.

I believe the phrase used to describe that is the ''law of unintended consequences'', meaning that while you''re trying to make something better, but because of not thinking the whole thing through, it ends up backfiring on you.

[endurorob]

A little off-topic, but I agree with your point about schools. In my day, if you flunked, you had to repeat a grade.

That''''s the way it should be in any country that values the education of its citizens. Yet, these days that''''s somehow ''''wrong''''. And BTW, I am what many posters on here would consider a ''''liberal''''.

Posted by ofbyfor3

I had some experiance with this in the past. My step son failed the second grade but the school refused to hold him back. We actually wanted to hold him back but they refused because it would hurt his self asteem. So what happens? They promote him to third grade and have him spend half his day in special classes so now the other kids call him ***, dummy... They continued to do this all the way to the 10th Grade, and he continued to fall farther behind the other kids in his class. He naturally quit school because it was nothing but torture.

[greeneyes222]

It''s puzzling to me that Obama''s team has nominated so many politicians with serious issues. If he''s not careful he''ll be so busy fighting fires he won''t have a prayer of implementing "change."

Surely there are other Democrats out there who don''t have this much baggage.

[ofbyfor3]

Posted by RowdynTex at 01:00 PM : Dec 16, 2008

Hey Rowdy, you never backed up your posts yesterday that most mortgage defaults are by builders rather than individuals who bought older homes.

Your responses on any topic are mere meaningless drivel, since they are only the result of tour ignorant opinions.

[ofbyfor3]

Why we even reward kids in school just for showing up, or doing their homework. How is this any different or less corrupt than what goes on in government and corporations. It''''s always easier to do this versus working for and morally and ethically earning it. Integrity doesn''''t exist any more.

Posted by Credibility2 at 12:40 PM : Dec 16, 2008

A little off-topic, but I agree with your point about schools. In my day, if you flunked, you had to repeat a grade.

That''s the way it should be in any country that values the education of its citizens. Yet, these days that''s somehow ''wrong''. And BTW, I am what many posters on here would consider a ''liberal''.

[credibility2]

Let the investigations run their course and expose for once the truth. Face it, essentially our systems are based on pay to play. Why we even reward kids in school just for showing up, or doing their homework. How is this any different or less corrupt than what goes on in government and corporations. It''s always easier to do this versus working for and morally and ethically earning it. Integrity doesn''t exist any more.

[ofbyfor3]

3 words - WHO IS INVESTIGATING? Stop making excuses for these corrupt politicians and attempt to end this corruption.

Posted by BailThisOut at 11:17 AM : Dec 16, 2008

No one is making excuses. I was merely pointing out the double-standard that exists. Since Bush & Cheney are still in power and have their cronies in the DOJ, do you REALLY expect that anyone under THIS administration will investigate the Halliburton issue? If so, you are TRULY naive.

[musethalia]

I''m curious to know how everyone in Chicago''s government, which is now spreading to NM''s government is under the microscope yet BO and CO can be ''clear and clean'' thru this mess? (without the ''golden child'' theory) He hasn''t even secured keys to the house yet and two Dem gov''s are under investigation - what is going on??

[musethalia]

HILARIOUS!

Posted by RowdynTex at 11:47 AM

Don''''t you have cigarrette to finish?

Posted by rudy6543

LOLOL! Not that I don''t agree that things appear to have a shady aspect, but if that cigarette comment was intended as I read it, that was funny!

[rudy6543]

HILARIOUS!

Posted by RowdynTex at 11:47 AM

Don''t you have cigarrette to finish?

[rudy6543]

The state hired CDR after requesting proposals for a bond adviser on Dec. 30, 2003. Sources familiar with the investigation said CDR initially did not make the list of the top three bidders. But the authority committee considering the bids redid the selection process and split some work, eventually hiring CDR for a part.
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Hardly sounds like a scandal. At least they required bidding on the contracts, unlike the Bush administration that shamelessly rewarded contributors with no-bid contracts.